San Antonio municipal utility CPS Energy ended a two-month legal battle with its corporate partner in the proposed South Texas Project nuclear expansion with a settlement Wednesday that allows the utility to immediately stop making payments on the project while retaining a small share.

The partner, Nuclear Innovation North America, also agreed to pay CPS $80 million and contribute $10 million in assistance for low-income local residents to pay power bills.

The deal, which CPS Energy said is worth $1 billion total, means the utility will retain 7.625 percent of the project to build two more reactors near Bay City.

Before the settlement, CPS owned 50 percent but was responsible for development costs of more than $1 million a day.

“This agreement extracts the maximum value for our community at this stage of the project's development,” CPS acting General Manager Jelynne LaBlanc-Burley said. “It accounts for our investment to date and the value of the land and water rights.”

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In return, NINA, which is owned by NRG Energy and Toshiba Inc., is free to openly court new investors and gets full management control of the project, which has garnered national attention as one of a handful that could restart the nuclear industry in the United States.

NINA is counting on a taxpayer-funded loan guarantee from the federal government to keep the expansion moving forward. The $80 million payment to CPS is contingent on securing the guarantee.

NINA's $10 million contribution to the nonprofit Residential Energy Assistance Partnership, which would be paid over four years, comes with no strings attached.

LeBlanc-Burley said the agreement leaves open the possibility that, once the plants are up and running, CPS could increase its stake.

“We have right of first refusal,” she said.

CPS' share of 7.625 percent would give it about 200 megawatts, or roughly a third of the additional energy the city will need by 2020.

CPS has spent about $370 million on the nuclear project's engineering and permitting.

The settlement, announced Wednesday at City Hall, still must be approved by the CPS board. That is expected to happen Monday.

CPS said it arrived at the $1 billion value of the deal by calculating 7.625 percent of the $13 billion CPS has projected the project to cost and adding the $90 million in payments to CPS and the REAP program.

The project's ultimate cost, though, still is unknown.

CPS executives had sold the project to the public and the City Council as a $10 billion deal, with another $3 billion in financing costs.

But a scandal erupted when it became known in October that CPS executives had kept under wraps a cost estimate from contractor Toshiba that was as much as $4 billion higher.

In December, CPS filed suit to clarify the terms of its contract with NINA. That escalated, as both parties filed more and more claims against each other. With Wednesday's settlement, CPS will drop its $32 billion suit against NINA.

“This agreement is of tremendous importance for Texas, NINA and for the American nuclear renaissance,” Steve Winn, chief executive officer of NINA, said in a statement. “We can continue developing one of the leading nuclear power projects in the country. The strengths of the STP 3 and 4 project ... will once again put us in contention for a Department of Energy loan guarantee and ensure we have no conflicts preventing new partners from joining the project.”

The South Texas Project nuclear expansion once was considered a front-runner for the taxpayer-backed guarantees, but its chances diminished once the partners started battling in court.

On Tuesday, the Obama administration announced the first of the loan guarantees, pledging $8 billion for two new reactors to be built at an existing nuclear power plant in Burke, Ga.

The current STP timeline calls for the reactors to be complete in 2016 and 2017, but that's contingent on federal approval, financing and other issues. The two reactors would produce about 2,700 megawatts of power.